Why Competition In The Music Space Is Great And
Fragmentation In The Music Space Is Dangerous

The plan was unveiled on Monday at a brief but highly
choreographed news conference in Manhattan, where Jay Z stood
alongside more than a dozen musicians identified as Tidal’s
owners. They included Rihanna, Kanye West, Madonna, Nicki Minaj, Jack White,Alicia Keys,
the country singer Jason Aldean, the French dance duo Daft Punk (in signature robot
costumes), members of Arcade Fire, and Beyonce, Jay Z’s
wife.

So, we have all of these artists, taking on Dr. Dre and Trent Reznor who were the keys to Beats
Music, which Apple is getting set to relaunch. Jay-Z is
positioning Tidal as more friendly to artists —
though that was also the marketing claim behind Beats, and then
it failed to attract too many users, in large part because
there was no free, ad-supported tier. Of course, it’s one thing
if you’re one of those megastars listed above, who get some
equity stake in Tidal, but what about every other musician? Is
it really going to be that good of a deal for them?Jay-Z and crew insist they’ll be paying better rates
than competitors, but considering competitors still
can’t get anywhere near profitability, it seems reasonable to
question if Tidal can actually make any money at all. It’s one
thing to say you’re going to pay artists more. It’s another to
defy basic economics.

Tidal also has no free, ad-supported tier, but does
have a more expensive $20 tier for
higher quality sound, which may attract random audiophiles, but
not much more than that. Indeed, the recording industry (and
many artists) have been pushing back against the free tiers
that already exist. Universal Music has
been demanding Spotify cut back on its free
tier. And Universal’s CEO Lucian Grange has been
using every opportunity to complain about “freemium” music plans.
Now owned by Apple, Beats wanted to offer service cheaper than
the standard $10/month and therecord labels said no.

And, of course, now Jay-Z is bashing free music
tiers as well:

“The challenge is to get everyone to respect music again,
to recognize its value,” said Jay Z, whose real name isShawn Carter.
“Water is free. Music is $6 but no one wants to pay for music.
You should drink free water from the tap — it’s a beautiful
thing. And if you want to hear the most beautiful song, then
support the artist.”

That’s kind of nonsensical in a variety of ways. Every time
we’ve heard people talking about getting people to “respect
music again” or “recognize its value,” the projects have failed
(often miserably), because they’re not at all focused
on what music fans actually want. Rather
they’re focused ontrying to change the behavior of music
fans and that’s really, really, really difficult —
especially when you’re not really offering that much that’s
different.

But Jay-Z has a plan to get around that:
exclusive deals.

Over the weekend, the Swedish blog Breakit reported —
citing sources close to the deal — that Tidal’s plan of attack
will be to ink first-window deals with the artists, where Tidal
would get first releases of tracks from big-name artists ahead
of any other digital streaming services. This would be
exclusive, but only for a period: Spotify, Deezer and others
would eventually also get these tracks, but only later.

At least they’ll go up on other services later, but this seems
like a dangerous path to go down. Again, rather than focusing
on providing more value the focus seems to
be on taking away valuefrom other services:
ending free streaming deals and doing exclusives to fragment
the market and make it harder for fans to actually listen to
what they want, when they want it and how they want it.

That’s the wrong lesson to
get at this stage of the game. We’ve gone through nearly two
decades of the recording industry fighting the internet at
every turn, and now that we’re finally starting to see some
services that actually cater to what people want, the old
industry players are jumping in and trying to kill
the golden goose yet again. Any time any service shows
that it can attract a lot of users, the recording industry
tries to figure out a way to bleed it dry as quickly as
possible, rather than helping it grow and building out more
value for users.

More competition in the online music space is a great
thing. But the trend towards locking stuff up, and
taking away the value to music fans, while similarly jacking up
the prices, doesn’t seem like a productive path. It seems like
one that is just going to annoy fans and push them back towards
unauthorized alternatives.

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